eBay is unloading its remaining shares in the online classified business Adevinta to private equity firms Permira and Blackstone for $2.2 billion in cash and 20% equity, it said. Adevinta had originally acquired eBay's own classified business back in 2020, leaving eBay with $2.2 billion in cash and 540 million Adevinta shares. While the new deal still needs to go through regulatory approval, the e-commerce and auctions giant expected it to close in the second quarter of 2024.
At the time it acquired eBay's classified business, Adevinta was majority-owned by the Norwegian publisher Schibsted. The company now intends to go private, and made the offer to eBay for its remaining shares through a private Norwegian LLC, Aurelia Bidco Norway AS, which was created for the purpose of this deal.
The offer values eBay's entire stake in Adevinta at approximately $4.3 billion, up $1.5 billion from the $2.8 billion valuation being circulated in press reports in September, eBay noted. Adevinta shares had jumped more than 21% on the possible Blackstone-Permira bid first leaked that month.
eBay had earlier sold part of its stake in the classified ads company for $2.25 billion in 2021.
It will now sell half its remaining shares for approximately $2.2 billion, cash upon closing and, with the rest, it will take a 20% equity stake in the newly privatized company. eBay said the funds will be put to use for "general corporate purposes," and says it remains committed to returning 125% of its cumulative free cash flow to shareholders through a combination of both repurchases and dividends over the three-year period, which runs through 2024.
After the deal's closure, Permira, Blackstone and their co-investors will have the right to purchase from eBay an additional number of shares in Adevinta, reducing eBay’s ownership position even further, to approximately 9.99%, the company also said. The purchase price of those shares will be the same price eBay will be paid for its Adevinta shares at closing, earning it an additional possible $1 billion-plus.
The deal is yet another nail in the coffin for eBay's broader e-commerce ambitions. Over the years, the company has unloaded pieces of its operation, including not only classifieds, but also payments with the spin-out of PayPal as well as ticketing with the sale of its StubHub business in 2019. Classifieds, in particular, feel like a holdover from the earlier days of the web, before the rise of e-commerce giants like Amazon and other large online marketplaces. Around the time that eBay sold its business to Adevinta, it noted that classifieds had only brought in revenues of $248 million in its most recent quarter, down by 3%. eBay's marketplace, meanwhile, had generated $1.9 billion during that same period.
Today, classifieds compete not only with e-commerce sites but numerous other places to score secondhand items, including online thrift operations like Poshmark and places that connect shoppers with local sellers, like Facebook Marketplace and apps like OfferUp. As a result of these changes, eBay has shifted focus away from auctions and classifieds to become a large marketplace for all sorts of goods, including collectibles, like trading cards and sneakers. It has also invested in its ability to authenticate apparel and fashion goods with the purchase of AI-powered Certilogo earlier this year.
As of its last earnings, eBay reported revenues of $2.5 billion, up 5% on an FX-neutral basis and in line with estimates. Non-GAAP net income was $545 million, or $1.03 per diluted share, above analyst expectations.